Given the shape and indication the new Railway Budget has offered, it is clear that the Narendra Modi-led NDA Government is a worthy successor to take forward the bold reforms that were initiated back in 1991
The maiden Budget tabled on July 8 by Union Minister for Railways Sadananda Gowda, the first BJP Minister to do so ever, was a dramatic, comprehensive and visionary curtain-raiser of the Modi Government’s policies.
The once elegant and well-run Indian Railways has gradually degenerated over years of bad leadership, populist exploitation and low investment, into an unsafe, squalid public service. Today it transports the middle-class and poor with uncaring disdain, and moves a falling proportion of freight in desultory fashion. But all this is about to change beyond recognition. The Railways are about to be rejuvenated.
Under the Modi Government, the Railways are a great national asset whose time has come, but it will need a huge injection of fund from outside the national exchequer. This cash-strapped but asset- rich Government also reportedly plans to raise Rs 80,000 crore from selling off a portion of the equity in a number of public-sector units. The buoyant stock market, at the start of a long-term bull run, will be of great help in this regard.
But, if the Rail Budget is any indication, the idea is not just to turn in an operating profit on the present state of the utility. This Government intends to take a transformative approach, involving a healthy dose of private-public partnership financing and foreign direct investment. The status quo is being given a thorough shake-up, and the battered and bruised Opposition, still unrecovered from its electoral drubbing, is both astounded and confounded.
Most NDA voters, constituting over half the electorate in several of the 29 States, with a decisive national average of 31 per cent, were probably much relieved to hear Mr Gowda’s Budget proposals. This BJP/NDA voter needs to be contrasted with the decimated Congress’s sad 19.3 per cent statistic, despite its continued efforts to project itself as principal representatives of the poor.
The BJP’s fans quickly realised that they have not been let down by the new Government in its first major statement of policy. There is to be no dilution, diminishment of pace, or damp-squib disappointment with rhetorical campaign pledges. Mr Narendra Modi had promised a bold, transformative and pioneering approach to modernisation, development and governance on the stump, and here, indeed, was proof of intent.
Populism, it is seen, has been redefined into a better product. The Railways will be cleaner, tech-savvy, with better food, more secure for women and from Maoist bandits, there will be internet connectivity and a cornucopia of amenities and choices at stations, to be upgraded beyond recognition, solar power will be extensively introduced, all Railways land will be properly mapped digitally, modern state-of-the-art coaches will be introduced, and so on.
On the fiscal side, the Railways will go some way towards paying its own way operationally, with tariffs linked to fuel prices in future. Massive PPP and FDI investment will be invited for the ambitious modernisation plans, including the first stages of the Diamond Quadrilateral and the freight corridors. The Indian Railways will retire debt and borrow less, while improving governance to cut away masses of wasteful practices, even as it moves more than the 23 million people every day that it shifts at present.
The particulars of this Budget are new in almost every paragraph, its emphasis on completing projects, creating tourist and pilgrim routes, the closure of thousands of unmanned crossings that lead to accidents, airline-style vacuum toilets, faster trains on existing tracks, a general emphasis on operational efficiency, and leveraging the massive asset base, putting in electronic surveillance, easier online ticketing etc indicate a comprehensive approach, as opposed to what the Prime Minister called ‘ad hoc’.
And overall, this giant undertaking run by the Government, its ministry, its Railway Board, its lakhs of employees, is going to be spliced with a lot of corporate DNA for the first time. The Indian Railways, the biggest public-sector enterprise, mired and wallowing thus far in third-world squalor, dying on its feet in the name of social obligation, is to be recast into its swanky, productive and profitable avatar.
The investors in the stock market, both domestic and foreign, clear about the route map now, decided to cash-in some profit, no doubt before the market indices start climbing again. The Sensex fell 517 points after weeks, but not because investors were disappointed with the Railway Budget. This, even as all the companies associated with manufacturing items or providing services to the Indian Railways and former Railway Board officials, all expressed their happiness and satisfaction with the Budget proposals.
The main Budget, coming on the July 10, will undoubtedly also be of a piece, as industrialist Anand Mahindra commented. And as if to indicate as much, there were two reformist and far-seeing off-budget announcements on July 8 as well. One was with regard to a firming up of 49 per cent FDI, to be allowed in defence-oriented manufacturing in India, permissible by the Foreign Investment Promotion Board route; and more, up to a full 100 per cent, by sanction of the Cabinet on a case-to-case basis. The other was a bold liberalisation in the repayment terms of infrastructure loans, from a difficult 10 year maximum, to a more realistic and attractive ‘life-cycle’ period of
25 years.
These initiatives have been taken, as if to bracket, enable and accompany the path-breaking Railway Budget. Most commentators are gob-smacked by its reach and ambition, and are asking if it can be implemented in equal measure. Expert opinion, however, sees no reason why not.
The Prime Minister himself was quick to make a statement to the people on Doordarshan, immediately after Mr Gowda’s presentation. He said, in effect, that the policy framework had to be reworked to bring out the potential of the Indian Railways as a key hand-maiden to the country’s economic development.
The lack of funds in the Government coffers, for this and the main Budget, will not be a constraint given the right set of reforms, inclusive of the labour laws. Indeed, it is now clear that this Government is the worthy successor to take forward the bold reforms initiated in 1991.
Then, the GDP was just 1.1 per cent and there was a paltry $5.8 billion in foreign exchange reserves. Reform in 1991 came about as an imperative to the country’s very economic survival, after those decades of unproductive socialism. And today, again, some elements in the fractured Opposition, are raising bogeys against the proposed FDI and private capital infusions intended. But now, it is good to remember that the USSR, the much emulated Socialist mentor of our early years, disintegrated and vanished, like some pre-historic dinosaur, also, in 1991.